Introduction
The UK Emissions Trading Scheme (UK ETS) was extended to domestic maritime activity on 1 July 2026, following the EU ETS, FuelEU Maritime and IMO measures. Charterers and traders must keep these regimes separate in their planning and contracts.
Charterers will not usually answer to the UK regulator, but the commercial burden may pass down the charter chain. The practical questions are which emissions are covered, what the charter requires and how the figures will be checked and corrected.
What the UK scheme actually catches
The scheme is initially domestic and activity-based. It generally applies to ships of 5,000 GT and above on voyages between UK ports, including return voyages, and to UK port activity. A UK-foreign voyage is not itself caught, only its UK port emissions are. Domestic UK voyages and UK port emissions attract a 100% surrender obligation. On UK Northern Ireland voyages, all emissions are monitored and reported, but a 50% surrender deduction applies.
It covers CO2, methane (CH4) and nitrous oxide (N2O) on a tank-to-wake basis. Whether it applies at anchorage depends on its location and the port boundary and may be voyage or port activity. Charterers should not assume every anchorage period is treated alike.
Who is responsible and who really pays
The regulated person is the maritime operator, normally the registered owner. If the registered owner does not perform the duties of an ISM company, then the UK ETS responsibilities can be delegated to the ISM company, which requires a legally binding arrangement. A conventional time or voyage charterer does not become the operator merely by agreeing to fund allowances.
The charterparty can nevertheless place the cost on the charterer. If allowances or payments are not provided for, the owner remains exposed towards the authorities and has a contractual remedy. The charterer's liability likewise depends on the agreed wording of the charterparty, not a regulatory claim.
Keeping the regimes apart
UK allowances (UKAs) and EU allowances (EUAs) are not interchangeable. The EU ETS fully covers intra-EEA and EEA in-port emissions, and partially covers EEA/non-EEA voyage emissions. It added CH4 and N2O to maritime CO2 from 2026. One employment may therefore create liabilities under both systems, calculated separately and settled with different allowances.
FuelEU Maritime, on the other hand, regulates the annual well-to-wake greenhouse gas intensity of onboard energy and uses compliance balances rather than ETS allowances. Charterers should resist an undefined 'emissions charge’, and the regime, calculation and settlement asset should be identified in a proper charterparty clause.
Time charters: fuel and allowances
Time charterers usually direct employment and buy bunkers, so charterparty obligations commonly allocate related allowance costs to them. BIMCO's ETS Allowances Clause for Time Charter Parties 2022 offers a model where owners monitor and report, charterers periodically transfer allowances, and adjustments address off-hire and redelivery.
The clause must still fit the fixture. Charterers should confirm settlement in UKAs or cash and, for cash, the price source and date. The charterparty clause should also specify how allowance costs are treated in cases of deviation, repairs, breach, off-hire, port emissions, eligible-fuel adjustments and corrections after redelivery.
Voyage charters and the sub-charter trip
Under voyage charters, owners normally provide the fuel and may price carbon into freight or use a surcharge. The charter should explain whether freight includes emissions, how any surcharge is calculated and how it interacts with demurrage without double recovery.
Charter chains create a further risk. A head charter may require regular UKA transfers, while the sub-charter provides only later cash reimbursement, or none. A back-to-back review should compare scope, settlement, data, deadlines, off-hire, remedies and time bars. Matching clause names does not guarantee matching obligations or cash flow.
Data and verification
Charterers rarely control statutory monitoring. They need contractual access to fuel data, emissions factors, voyage and port allocation and verifier corrections. This matters particularly on UK-Northern Ireland voyages, where reported emissions and the surrender obligation differ. A bare demand for UKAs is insufficient to check liability.
The first UK report, for 1 July - 31 December 2026, is due by 31 March 2027. UKAs for the 2026 and 2027 periods are first surrendered together by 30 April 2028; the ordinary UK deadline is 30 April, against 30 September under the EU ETS. Clauses, budgets and transfers must reflect those different calendars. Fixtures ending earlier need a surviving reconciliation mechanism and a time bar.
Conclusion
For charterers and traders, the response should be practical: identify the regime and route, isolate the covered emissions, confirm the regulated entity and ensure that the charterparty allocates costs, evidence collection, timing and adjustment without gaps. Existing wording prepared only for the EU ETS should be reviewed, and sub-charters compared with head-charter requirements, before UK exposure and allowance-transfer obligations accumulate.
How Skuld can help
Contract reviews can be provided under our FD&D cover. Our underwriters can also assist our charterers and traders with tailor-made covers, ensuring the appropriate protection and extensions are in place for the relevant contractual framework.
Should you have any comments or questions, please do not hesitate to contact us at any time.
On behalf of your Skuld team of underwriters and claims handlers who serve our charterers and traders 24/7/365.
Principal sources
UK ETS maritime legislation
Environment Agency, UK Emissions Trading Scheme for maritime: how to comply
UK ETS Authority interim and main responses
BIMCO ETS Allowances Clause for Time Charter Parties 2022
BIMCO UK ETS commentary dated 8 July 2026